Monthly Archives: March 2011

Info Exchange – What Only the CEO Can Do

Welcome to the Loyalty Factor Information Exchange, a bi-weekly service providing summaries of major publications and books on various management and customer relationship topics. 

 Loyalty Factor has been instrumental in helping companies:

  • Increase Customer Satisfaction by 20 – 33%
  • Increase Revenues by 50% in 18 months
  • Increase Manufacturing Production by 200% in 18 months.

Our information exchange this week highlights an article from Harvard Business Review by A.G. Lafley, “What Only the CEO Can Do“.


What Is The Work of the CEO?

Lafley combines his nine years’ experience as CEO of Proctor & Gamble with management expert Peter Drucker’s latest writings to answer this question.

The CEO is solely held accountable for the performance and results of the company.  This is according to not only its own goals, but also to the often diverse and competing goals of external stakeholders.  This means the CEO is responsible for linking and aligning the outside of the company to the inside.  This is accomplished through the four following tasks.

 

1.  Defining the meaningful outside.

At Proctor & Gamble this meant emphasizing that the customer is boss.  The company has also worked to change what had been win-lose negotiations into win-win partnerships with retail customer and suppliers.

 

2.  Deciding what business you are in (or not in).

Where to compete and where not to compete is an ongoing question at P&G.  After a thorough analysis of its strengths, current competitive position, and structural conditions, P&G decided to exit food and beverage arenas and to sell its pharmaceutical business.  Instead they are growing from its core and focusing more on low-income consumers and developing markets where sales have been growing over the last decade.

 

3.  Balancing present and future.

P&G defines realistic growth targets and uses flexible budgeting processes with complementary short-term, midterm, and long-term goals.

 

4.  Shaping values and standards.

The CEO must take the organization’s values and interpret them in context of change and competition.  From there they must define the standards which will guide all company decisions.  Lafley redefined ‘trust’ at P&G from meaning employees could rely on the company for lifetime jobs, to ‘trust’ in the company’s brands and ‘shareholders trust’ in its value as a long-term investment.

 

A.G. Lafley retired from Procter & Gamble (P&G) in February 2010 after 32 years of distinguished service. He became president and CEO of the company in 2000 and was elected chairman of the board in 2002. Lafley’s focus on consumer-driven innovation and consistent, sustainable growth helped more than double P&G sales and grow the portfolio of billion-dollar brands from 10 to 24 during his leadership tenure. At the time of his retirement, P&G was one of the five most valuable companies in the U.S.